Daily Research News Online no. 10217 - BT Puts Phorm on One Side

BT Puts Phorm on One Side

July 6 2009

In the UK, BT has dropped its arrangement with behavioural ad targeting company Phorm, citing the need to divert investment to meet its public commitment to developing next generation broadband and television services.

The telecoms giant said in December last year that it expected to deploy Phorm's Webwise software after further trials, apparently giving it the all clear after legal problems involving an earlier trial. In September, UK regulator The Department for Business, Enterprise & Regulatory Reform (BERR) had cleared use of the technology, but controversy continued to dog the trials, with the EC stepping into the fray in April, arguing that the UK Government had failed to ensure compliance with EU data protection and privacy rules. UK mobile and broadband provider Orange announced last November that it had pulled out of plans to use Webwise because of concerns about customer privacy.

BT has not released results of the latest consumer trial, but has announced that it will opt ti invest £1.5bn in expanding its broadband network nationwide.

A spokesman said: 'We continue to believe the interest based advertising category offers major benefits for consumers and publishers alike. However, given our public commitment to developing next generation broadband and television services in the UK we have decided to weigh up the balance of resources devoted to other opportunities. Given these resource commitments, we don't have immediate plans to deploy Webwise today.'

The company specifically stated that it remains interested in the software however: 'the interest based advertising market is extremely dynamic and we intend to monitor Phorm's progress with other ISPs and with Webwise Discover before finalising our plans' continued the statement.

AIM-registered Phorm saw shares tumble in today's trading, but it might still work in the UK with Virgin Media and Carphone Warehouse / Talk Talk, and has apparently a clearer field for a recently launched Korean operation. A statement today from Phorm said: 'As regards our UK deployment, Phorm's activities remain ongoing and we look forward to creating the conditions necessary for UK ISPs to move to deployment. In parallel, we continue to focus considerable effort on faster moving overseas opportunities. In so doing we have already minimised our dependency on the deployment by any single ISP or in any particular market. In addition to making excellent progress in South Korea, we are engaged in more than 15 markets worldwide including advanced negotiations with several major ISPs.'

The company has continued thus far to attract investment despite its $49.8m operating loss for the year ended 31 December 2008, and a further $19.7m for the first six months of 2009; and has recently launched a web personalisation widget, Webwise Discover.

Incorporated in Delaware, USA and with offices in New York, Seoul, Moscow and London, Phorm has more than 140 employees and is online at www.phorm.com .